Munir, R. v

LORD JUSTICE THOMAS: On 21st December 2006 the appellant was convicted of cheating Her Majesty's Revenue & Customs of approximately £6.5 million.

The facts in relation to the way in which he cheated the Revenue can be shortly described. It is not necessary to set out the detail because they are not relevant for the purposes of the appeal. The appellant had formed a company called Talkland Telecom in March 2000 to buy and sell mobile telephones. It is not relevant, because he was not prosecuted in respect of the period prior to 1st September 2001, to say anything about the previous trading but very significant sums were involved.

Between 1st September 2001 and 30th November 2001 the company sold over £40 million worth of mobile telephones, making a significant profit by not charging VAT. He completed at the end of that trading period a VAT return in which he fraudulently claimed various set-offs. The sum of approximately £6.5 million was lost to the Revenue.

He told a defence, which on the jury's verdict, was a pack of lies. He was, as the judge described him to be, a cold and calculating criminal, and the nature of its offence and the grave economic damage it has done was marked by the sentence of 6 years' imprisonment for which the judge passed.

There were also money laundering offences to which it may be necessary to refer just in a little detail. He was given a total of one further year on those offences of which he was convicted to make a total of 7 years in all.

Confiscation proceedings followed. The parties agreed that the benefit of his criminal conduct was approximately £7.572 million, which included the time value of money. After a hearing before His Honour Judge Gee, the judge decided that the sum of approximately £5.6 million might be realised from the assets and made a confiscation order accordingly. He imposed a period of imprisonment of 7 years in default. Although that was over a year ago, the sum of only £170,000 has so far been recovered for the benefit of the public out of this dishonest cheating of the Revenue and the serious economic crime thereby committed.

He was given permission to appeal to this court on one short point, which essentially amounts to whether the judge double counted some of the assets for the purpose of recovery. It is not necessary to describe the assets in detail. There was a schedule before the court. There was an Aston Martin, as it is accepted, that the appellant had engaged in an extravagant life-style, but it has rightly been pointed that the Bentley, the Porshe and the Aston Martin were not paid for in cash but paid for by documentation that can be traced. He also had assets which were sums in cash in various solicitors' bank accounts. He had also the assets included loans to others and property and certain other miscellaneous items. The properties concerned were properties which we will have to describe in a little more detail and to which I will refer in a moment.

The fraud in which he was engaged were relatively simple, as we have set out. He would have, by reason of the trade in which he was engaged, a very, very significant sum by way of turnover. From his company called Talkland Telecom he withdrew in the period in question and with which this application is concerned cash in the sum of £1.914 million. It appears that what he did was to go with either with a briefcase or suitcase to a branch of the Royal Bank of Scotland with his father and removed that cash. He gave an explanation at trial as to the use that he was to make of it, namely he was to purchase telephones for others to sell. The jury by their verdict rejected that. There is no evidence whatsoever as to what he did with that cash.

He gave, prior to the trial, instructions to an accountant, Mark Fairhurst BSC FCA MAE, who is described as a forensic partner in PKF UKLLP Accountants and Business Advisors of Liverpool. In the period after the trial and prior to the hearing before Judge Gee, the accountant carried out some work in relation to the assets and what had happened to the sums of money. He was told, and this is recorded in his report, that the money was used for certain specific purposes. When the report was completed, that report was no doubt placed before his advisors for a decision as to whether the report should be placed in that form before the court. We assume that because the report contained instructions as to the use of the money, at that stage either no decision was made, and that is what we were told by counsel today as to whether to call him, or that a decision had been provisionally made. However, at some stage a decision must have been made to decide not to call the appellant to give evidence. It is, we must say, a matter of considerable concern to us that a report was put before the courts based on instructions, when it was clear that at some stage, and we have not been told when, that this appellant would not be called. It seems to us that it should have been that it was the duty of those conducting the case on the appellant's behalf to have carefully considered in those circumstances whether it was proper to proceed with this report and certainly to have made very clear to the judge that any possible reliance on Mr Fairhurst's evidence as to what he had been told by the appellant was no longer relied upon.

It is clear from the very careful judgment of Judge Gee that was not the case. He was at pains in the course of the judgment of this matter to make clear that he did not rely on parts of the report of the expert in those circumstances. We have been told by counsel today that the judge was in error. If he was in error, that was an error induced by the way in which, contrary to proper practice, a document was put before the court containing instructions at a time when it was clear that this appellant was not going to give evidence.

We have commented on that because at the heart of this case there is one simple issue: it has been well-known for many years, and particularly must have been known to a man of the calculated dishonesty of this appellant, that the one way to break the chain in tracing money was to remove the money from either in a briefcase or a suitcase from one bank and take it somewhere else. There was in this case plain evidence of the removal but there was, as we have already indicated, no evidence at all as to where that money was placed because the appellant had decided to produce himself no account, nor to cause the companies, if in truth he had put the money into companies, to give evidence in relation to where he had dealt with the money. It is therefore, in our view, in a case of this kind, it was quite wrong to have put before the court on what was the central issue in relation to cash, instructions of an appellant whom it was clear at some stage there was no intention to call.

We therefore, against that observation, shall return to the position of this accountant in due course. The issue that is before the court. It is clear that there were three properties, one being a development at Botham Hall, another at Rappax Road and two flats at Deansgate, where it is said that cash that had been taken from the account for Talkland Telecom had it is said on the appellant's part been used to acquire these properties. As it is said that the judge and, as is clear from the asset schedule, took into account in reaching the figure to which we have referred the value of the three properties, it is said that there was double counting because the cash had been used to acquire them. If that proposition was correct, it would follow that there had been an element of double counting.

The case that was principally put forward to us today is was that if we carried out what I regret to have to refer to as "a minute syntactical analysis" of the judge's summing-up and of counsel for the Crown's opening, we could see, through a construction of the phrases used therein, a case being put forward by the Crown that the money had been so used. It was clear to us that there was no other way in which anyone could begin to argue such an appeal. It is clear from what we have already said that there is no account of the sums abstracted from Talkland Telecom and no documentation which shows, as we shall explain in a little more detail, how sums came to be paid into the companies which companies were used as part of the complicated process of transferring the funds ultimately used to buy the houses. As those companies that were the initial source of some of the funds could have produced their money in all kinds of different ways, it was inevitable and the clearest possible inference that the judge should have followed, as he did in this case, that there was no evidence to consider or begin to consider any issue of double counting. So, what we have endeavoured to do is to look and see the way in which the Crown's case was put to see if there is any foundation for the argument.

We first take the two properties in Deansgate. In respect of those two properties what happened broadly was as follows. On 1st November 2001 deposits of £29,500 were paid in respect of each of the flats. There was then transferred on 28th November 2001, a sum of £630,000 from a company called Spiral Technology. That was paid into an account of a solicitors called Buss Murton.

The question arises, before we explain what happened to that sum, as to how the £630,000 paid by Spiral Technology could be attributed to the cash generated in Talkland Telecom. There was no evidence. The appellant here had taken the deliberate decision to say and do nothing to procure the documentation which, if his account was true, would have shown where the money came from.

However, looking at the evidence when the case was put before the jury, it was suggested that the money that was paid by Spiral to the client account was taken from the cash paid into Spiral, in order that two further sums could be paid in respect of a flat in Deansgate. Those two further sums were a sum of £296,000 and £48,000 which were paid in April 2002. At first sight it might seem that bearing in mind the fact that the transfer had been made in November 2001 from Spiral to Buss Murton and the subsequent transfers were not made until April the following year, that there would be no necessary correlation between the payment from Spiral to the Buss Murton client account and the flats. However, it seems to us that it was a reasonable case for the Crown to put before the jury that the sums were related because the deposits on the flats were both, as we have said, paid in November and it could be suggested that the sum of £630,000 paid later in November was referable to that.

As that case was in respect of those flats advanced in that way to the jury and on the basis of the evidence that we have endeavoured to outline, it could be seen to be a proper inference from the whole of the evidence before the case and the way in which the jury returned their verdict, that they had accepted the case that the money was cash taken from Talkland, transferred into Spiral and used to buy the two flats at Deansgate for the completion of the purchase in April 2002.

In the circumstances, as it is the duty of the judge in a subsequent confiscation hearing obviously to have regard to the whole of the evidence in the case and to the verdict of the jury, it seems to us looking at the matter entirely afresh, that there could well be the risk of some double counting. The sum involved, in our view, is £48,000 in respect of one of flats and the sum of £296,000 less £147,977 in respect of the other. We say "less" the sum of £147,977 in respect of the other because the second of the flats was mortgaged to the Cheltenham & Gloucester Building Society and £147,977 returned into a client account of the solicitors who had become mixed up in this fraudulent activity and there is no account as to what happened to that. We therefore consider that there may have been in respect of the Deansgate properties a total sum of £196,023 in respect of one and £148,023 in respect of one and £48,000 in respect of the other, making a total of £196,023 in all. So to that extent, having looked at the whole of the evidence, and set out the coincidence of timings and what was put to the jury, we think that on the evidence that there may well have been an element of double counting. But that is as far as we shall go. It would be charitable, I think, to describe the way in which the accountant sought to put forward an argument in respect of the other properties as building castles in the air.

An accountant is expected, when assisting this court in a matter of this kind to help the court and bring to bear as a professional man his experience and expertise. We would expect an accountant, first of all, in a case where a defendant had said one thing to the jury and was now putting forward a different account, as set out in the accountant's reports, to draw to the court's attention that in cases of this kind there must be banking evidence. There must be documentation and to weigh up in an honest and proper manner the value of anything put forward because, as we have endeavoured to explain, the trick of transferring sums in cash is a well established means of breaking the chain of money transfers. But monies can only be paid into accounts where above certain amounts with an explanation, and in all cases can only be paid into accounts by evidence of documentation. That is something that, first of all, we think should have been pointed out. Secondly, and we have already referred to this, we are surprised that the report was put forward when, as it was, when it was known the defendant was not going to give evidence. Thirdly, it is what we have described as castles in the air. We have carefully considered the report of Mr Fairhurst and all he is seen to do, in our respectful view, is to take one sum amounts that appear to support the instructions given to him in respect of trying to putting together an account to the court which might suggest that the cash taken from Talkland Telecom was used to buy the properties. We comment in those terms because what has happened in this case, we hope will not happen again.

We will now turn to examine what the documents actually show. The two properties in question, Botham Hall and Rappax Road, were purchased inter alia by sums of £800,000 and £400,000 transferred from a company called Vista Assistance SA. We understand that to be a Spanish company. The company concerned had received a sum of £500,000 in June 2003 from an Isle of Mann company which was one of the fraudulent vehicles used by the appellant, a British Virgin Island operating in the Isle of Mann, one of the companies used by the appellant for money laundering. That company had received by telegraphic transfer, which are evidenced, the sum of £725,337 from Talkland during October 2001.

There had also been transferred into Tyron Consulting sums from Lets Talk Communications Limited of £375,000 on the 23rd May and Lets Talk had transferred £433,000 on 30th May. The second sum had gone into a client account of another solicitor.

It seems to us that when one tries to analyse out by the help of the money flow document as provided to us, it is quite clear, and we accept, that sums by way of telegraphic transfer, not by way of cash, came into to Tyron and were paid into the Spanish company. Those funds may well have been used to purchase the properties at Rappax Road and Botham Hall. There would be no double counting in that respect. The question is: can it be shown if cash came?

We have set out a reference to the transfers upon which the accountant relied. But we would express this real concern. Nothing is known about Spiral Technology, Lets Talk or Vista, save that each was engaged in some form of trading. It may well be it is the position that those companies could have received some cash. We know not. But they could have used that cash to carry out further fraudulent activities or to engage in some form of legitimate trading. But there is absolutely nothing to show that Spiral Technology or Lets Talk passed any sums that came by way of cash that can be directly traced to the sums that came by way of cash and Talkland Telecom.

That conclusion is heavily reinforced by what was contained in the document before the jury. This was an attendance note of a solicitor who had sought instructions from the appellant as to the way in which Vista had operated. That note made it quite clear that Vista was engaged in some form of trading in relation to telephones. Whence that document became available, it seems to us very, very difficult indeed to see how any person could have put forward a suggestion to this court or to the trial court that somehow, by weighing up numbers here and numbers there, that somehow the cash could be referable to the cash taken from Talkland Telecom. We are bound to say that we find it very troubling that a professional man should put forward a report to the court in those circumstances. We have today asked about the explanations as to how this came to happen. Before we decide to take any further action, we would ask that the professional man concerned provides observations to us, because it is the duty of these courts to ensure that experts, particularly in complex financial cases of this kind, behave with singular integrity in the discharge of their duties to this court. It may well be that there is an explanation for what happened. We know not. But we would invite, before deciding to take any further action, observations from the accountant concerned.

It seems to us that once it became apparent as to what Spiral Technology, Lets Talk and Vista Assistance were actually engaged in, that no documents had been provided by the defendant. The defendant had chosen the route of using a professional advisor to get his case across rather than giving evidence and the inherent improbability of someone who by this stage was subject to Her Majesty's Customs and Excise investigation starting to put money back into operation into property that could be traced, that there was any real basis upon which it could be argued that there was double counting in respect of those two properties.

We have carefully examined the other evidence and what the judge said. Whether it could be inferred that the jury might have taken a view which the judge had taken into account when he came to make findings of fact. But on an analysis, even an analysis that does not need to descend into minute syntactical considerations, there is absolutely no warrant whatsoever for suggesting that either the judge or the Crown suggested to the jury that the sums used for Botham Hall or Rappax Road originated from the cash removed from Talkland Telecom. In respect of those two properties, therefore, there was no double counting.

We therefore have come to the view that the amount that the judge certified must be reduced by £196,023 for the reasons we have set out. The judge imposed a term of imprisonment of 7 years in default. People who engage in these serious economic crimes and make no effort whatsoever to assist in the restoration of the deprivations they have made upon the public can expect no mercy. We intend to reduce the sentence by not one day.

LORD JUSTICE THOMAS: As to the costs of this matter, we will hear counsel. We have obviously thought about what we should do about costs. As you have substantially won the appeal, we would make almost certainly an order in respect of costs but we wonder whether the justice of the matter should be dealt with -- the appellant has succeeded to some limited extent -- and whether the best course to follow would be to make no order as to costs?

MR WIGGLESWORTH: Can I take instructions? (Pause) His assets are all restrained and we think probably the best course is no order as to costs.

LORD JUSTICE THOMAS: Do you have any observations?

MR LAWSON-ROGERS: No, I do not my Lord. Could I seek some guidance as to the future so far as the accountant is concerned. Does the court intend to send a letter pending the decision?

LORD JUSTICE THOMAS: We shall send a copy of our judgment to him and a letter asking whether there are any observations as to whether we should take the matter further by a reference to the Disciplinary Committee of the Institute of Chartered Accountants.

MR LAWSON-ROGERS: Normally I will, because those who instructed on the confiscation proceedings are interested in the outcome of today, normally I would contact them and explain what had happened. The issue will obviously arise, if I do that, and I think I normally would, unless you direct that I should not, it may well be that they might suggest that they inform Mr Fairhurst and he speaks to me. I can see that might be a course which you would not approve of.

LORD JUSTICE THOMAS: We can see absolutely no reason at all.

MR LAWSON-ROGERS: I can explain to Mr Fairhurst.

LORD JUSTICE THOMAS: I think it would be better if you receive a copy of our transcript. I cannot tell you how long that will be. I would hope you would have it by the end of the month.

I am concerned about your own personal position as regards to your payment. We would leave that for you to pursue. We cannot do anything because although the order we have made as to costs is inter partes there is your own personal position. Please, if you can get him to fill in a form then obviously we will consider the matter, because there is no reason why, if you satisfy, we should not properly consider that. We would obviously wish to be told by the solicitors the amount of the accountancy fees in this case.

MR LAWSON-ROGERS: I appreciate that. I will ask for that.